Netflix falls short on users without House of Cards-size hit

Andrew Cummings
April 20, 2017

The company said first-quarter profit more than quadrupled to $178 million, or 40 cents a share, compared with analysts' predictions of 37 cents.

Revenues: $2.64 billion, slightly below the firm's estimate of $2.65 billion, but in line with the consensus.

The streaming firm added 4.95 million new subscribers in the quarter, fewer than the 5.2 million it had forecast. This coming weekend, it is about to have even more reasons to celebrate as it expects to hit the 100 million subscriber mark.

The results come after Netflix added 7.05 million new subscribers in the fourth quarter of 2016, setting a quarterly record for net subscriber adds.

Indeed, Netflix's flagship series, "House of Cards", delayed the premiere of season 5 from the first quarter to the second quarter.

Netflix, said it expects to add 600,000 subscribers in the United States in the current quarter, above the FactSet estimate of 364,000. This is a bit less than the company's own projections that saw it predict 5.2 million subscribers in the first quarter - 1.5 million in the US and 3.7 million internationally.

"A bet on Netflix continues to be a bet on continued high growth, something which certainly isn't guaranteed", Jackdaw Research analyst Jan Dawson said in an online note. He feels that the strong release slate for the second quarter and the additional local languages should drive improved subscriber adds during the second quarter.

Netflix says the opportunity ahead remains "gigantic" despite a slowdown in subscriber numbers, including global markets. "At that point, Netflix might disrupt itself again, as it's done throughout its history with innovations such as DVDs by mail, subscription monetization, digital streaming and original content".

"We definitely have YouTube envy", Hastings said.

As it is, Netflix expects to spend about $6 billion on programming this year.

Its shares dropped as much as 3 per cent in after-hours trading before rebounding to gain 1.3 per cent.

The company made clear that worldwide investment will be a key focus going forward, with strides being taken to improve content offering to match local tastes in Asia, Middle East, and Africa.

Netflix says it plans to operate with about $2 billion in negative cash flow this year to aggressively grow its original content slate.

Other reports by iNewsToday